WEST CHESTER, PA. — Five years ago, Kyle Peters founded a frozen dessert business, inspired by his mother’s battle with colon cancer. As she endured grueling rounds of chemotherapy, ice cream provided comfort; however, the products she ate were packed with sugar and lacked the nutrients her body needed, said Mr. Peters, a former college athlete with a passion for cooking.
Months after her death, Mr. Peters began developing recipes for a high-protein ice cream with no added sugar, formulated with organic skim milk, cream, organic egg, organic erythritol, chicory root fiber, whey protein isolate and monk fruit. He launched the brand Six Pack Creamery with aspirations to sell the products into retirement communities, sports stadiums, college dining halls and hospitals.
Like any entrepreneur, Mr. Peters navigated his startup through numerous missteps and unforeseen challenges. The brand persevered during the pandemic, landing a handful of deals with professional sports teams and major foodservice distributors. Last year, he renamed the business Carter & Oak to reflect its premium, wellness-oriented positioning (Think “more Lululemon and less GNC,” he said) and resonate with a broader range of consumers, including cancer patients.
But surging costs for ingredients, packaging and production in recent months strangled his margins.
“If I could even find the ingredients I needed, the markup on them was significant,” he said. “My margins for the last six months have not been what they were for the last couple years.
“Maybe that would have been different if that was happening two years ago before the inflation and everything else. But with the way things are now and the outlook for the next couple years, when I was hammering into those numbers it just didn’t look like it would be economically viable to scale this business to something successful.”
By October, any remaining hope for continuing the business evaporated.
“Was it a failure? Yes,” Mr. Peters said. “Was it a waste? Absolutely not.”
Here are five lessons he learned during his five years as a food entrepreneur.
1. Margins matter: “Everyone says it, but margins, margins, margins. Your margins need to make sense from the jump. I can’t stress it enough that you should be reaching out to co-packers before you need one to learn what the cost structure could be if/when you eventually are ready to scale.
“Reach out to your suppliers and find out pallet, half truck and truck load pricing. This also will help you get a better idea of what your COGS (cost of goods sold) could be in the future. If the numbers don’t work, then you need to change something.”
2. Adapt, but don’t compromise: “People think all you need to be successful is hard work and passion. That’s not true. Economics matter. The finance of the business matters. You need to understand numbers and also realize that saying, ‘I can’t create this product the way I want to for the price I need to’ and then moving on, that’s a strength. That’s a win.
“You may have failed at making that product successful, but you’re succeeding in becoming a better entrepreneur and a better person because it takes a lot of self-awareness to recognize that, and ultimately that makes you stronger. Now you can put your efforts and energy into something that will work.”
3. Be realistic: “I was blinded by that grind, hustle, success culture in the beginning. I quit my job right away and had nothing else, and that’s silly. You have to be practical. You have to look at things with a business mind. You’re going to come into those situations where you do need passion, you do need drive and grit and everything else to push through, but for me, right now, this wasn’t one of those times. I couldn’t passion or grit my way to better unit economics.”
4. Be patient: “Have aggressive patience. You need to understand that things take time, but that doesn’t mean just forget about them or stop working on them… Give people (especially buyers) the appropriate time and space. But don’t get discouraged after a month… or six.”
5. Be humble: “Have a clear plan and vision for how you want to execute on your business. But don’t get so married to the original plan that you fail to recognize if/when things need to be changed… like a rebrand. You must learn to put the business and others before your ego.”